Air India to start Melbourne, Washington Milan and Birmingham (as second point in UK)

anna.aero’s prediction for Air India’s new routes – Melbourne, Milan, Birmingham and Washington

“We are looking to add new flights to a number of new markets. These include destinations in Australia, Italy, the US and a second stop in the UK,” revealed Deepak Brara, Air India’s Commercial Director, at the recent Routes Asia Conference in Mumbai. anna.aero investigates the potential route development suspects in terms of which will be the points most likely to be added to the Indian national airline’s network map.

Melbourne wins the Air India cup

Looking at Innovata data for April 2013, there are currently no direct flights between India and Australia, as a result (and bilateral agreements aside) Air India will have the pick of which route pair it wants to operate on. Realistically, any new route in India is most likely to start in either Delhi or Mumbai, with Sydney and Melbourne at the top of the route shopping list in Australia, given that both cities are at least two to three times the size of Perth, Adelaide and Brisbane in terms of population.

To help narrow those route choices down, Brara indicated at the Routes Asia event that the airline will continue to develop New Delhi’s Indira Gandhi International Airport as it primary international hub, so it is perhaps safe to assume that this will be the Indian focal point for this next phase of intercontinental services. He also gave a steer in terms of what types of destinations the airline was considering: “We have a huge home market so we can develop without having to worry about serving transfer traffic. As a result, we will not really focus on sixth freedom markets but simply serving strong O&D markets”. On that basis all four route choices have been selected based on strong demographic criteria with Indian diaspora being the key element. It would also seem to suggest that Air India is unlikely to use its plush new terminal facilities in Delhi to chase kangaroo route traffic routing from Europe to Australia.

According to the latest data from the Australian Bureau of Statistics, the Australian state of Victoria, which includes Melbourne, has a total population of around 5.6 million, with 2.1% reporting India as country of birth. This would suggest that there are approximately 120,000 people born in India living in the city – making it the prime target for Air India.

Hub Airline

Flights from DEL (WF)

Destinations in Australia from hub

Flights to MEL from hub (WF)

Cathay Pacific (HKG)

14

ADL, BNE, CNS, MEL,PER, SYD

21

China Southern Airlines (CAN)

10

BNE, MEL, PER, SYD

10

Emirates Airline (DXB)

28

ADL, BNE, MEL, PER,SYD

21

Etihad Airways (AUH)

7

BNE, MEL, SYD

7

Japan Airlines (NRT)

7

SYD

0

Malaysian Airlines (KUL)

12

ADL, BNE, MEL, PER,SYD

14

China Eastern Airlines (PVG)

7

CNS, MEL, SYD

7

China Eastern Airlines (PEK)

7

SYD

0

Qatar Airways (DOH)

14

MEL, PER

7

Singapore Airlines (SIN)

14

ADL, BNE, MEL, PER,SYD

21

Thai Airways (BKK)

14

BNE, MEL, PER, SYD

14

Source: Innovata April 2013

Despite there being no direct flights between India and Australia, there are no end of options for passengers to travel via an intermediary hub (both sectors operated on the same airline) between Delhi and Melbourne. There are nearly 125 weekly flights into the Victorian state capital, from the nine hub airlines offering at least a daily flights to and from Delhi, via their respective hubs, so any new direct Air India will steal traffic away from these incumbent airlines.

Just to confirm that Melbourne is the obvious choice for Air India in Australia, the airline has already announced the route once before! Former Air India Chairman Arvind Jadhav announced the plans for a Delhi-Melbourne service in June 2010, but nearly three years later there is still no flight.

Maybe this time: Pictured in June 2010, former Air India Chairman, Arvind Jadhav, and Melbourne Airport MD and CEO, Chris Woodruff, inked a deal for Delhi-Melbourne flights to start nearly three years ago. While this goes to show that a new service at your airport has not started until the wheels hit the tarmac, anna.aero is hopeful that the operation will actually start this time around.

Milan to start… finally!

The only surprise when Brara suggested that Air India was going to start flights to Italy was why it has taken the airline so long to realise this. The Indian community in Italy is the second largest community of Indians in Europe, after the UK. As per Italian official population estimates, around 140,000 Indian nationals are resident in Italy – concentrated around Rome, Milan and Turin.

Launch date

Airline

Route

WF

Apr-13

China Airlines

Rome (FCO) – Delhi (DEL) – Taipei (TPE)

2

Apr-12

China Airlines

Rome (FCO) – Delhi (DEL) – Taipei (TPE)

2

Jet Airways

Milan (MXP) – Delhi (DEL)

7

Apr-11

China Airlines

Rome (FCO) – Delhi (DEL) – Taipei (TPE)

2

Jet Airways

Milan (MXP) – Delhi (DEL)

7

Apr-10

China Airlines

Rome (FCO) – Delhi (DEL) – Taipei (TPE)

3

Apr-09

No Flights

Apr-08

No Flights

Apr-07

Alitalia

Milan (MXP) – Delhi (DEL)

6

Alitalia

Milan (MXP) – Mumbai (BOM)

6

Apr-06

Alitalia

Milan (MXP) – Delhi (DEL)

6

Alitalia

Milan (MXP) – Mumbai (BOM)

6

Apr-05

Alitalia

Milan (MXP) – Delhi (DEL)

6

Alitalia

Milan (MXP) – Mumbai (BOM)

6

Apr-04

Alitalia

Milan (MXP) – Mumbai (BOM)

6

Source: Innovata April 2013

While China Airlines has been operating continually for the last three years, presently flying Rome Fiumicino via Delhi and onto Taipei twice-weekly (although it originally started thrice-weekly), it is the only carrier offering direct flights between India and Italy at this time. Over the last 10 years both Jet Airways and Alitalia have dabbled in the market, but neither has been able to maintain their service, as both carriers have had to wrestle with issues with their respective long-haul networks as part of bigger structural route rationalisations. In addition, historically there have been several second and third tier carriers which have periodically offered connections from airports like Milan Bergamo to points in India like Amritsar, which would seem to strengthen the case for Air India to start operations from Milan rather than Rome, where of course it will face direct competition from China Airlines.

Air India has already launched services once before at Birmingham Airport, in May 2005, with flights routing from Amritsar, via the UK Midlands and onto Toronto. anna.aero thinks that Birmingham will again become the second point in the UK on the Air India network map.

Unfinished ‘profitable’ business at BHX

Speaking from personal experience (the author is the former Business Development Manager of BHX) the return of Air India to Birmingham and not Manchester, as the second point in the UK, is a matter of unfinished business for the airline. Having started operations in May 2005, by October 2008 the airline moved its profitable (yes, the words ‘Air India’ and ‘profitable route’ do sometimes go together) Amritsar-Birmingham-Toronto to London Heathrow in order to maintain its profile of allocated slots at the London airport. These US$ multi-million valued slots needed to be filled, as Air India was using its then recently delivered 777-200LRs to operate direct services from India to the US, rather than a one-stop service through Heathrow, as it had done in the past with its 747-400s.

In the past, a plethora of airlines, including Mahan Air, Uzbekistan Airways, Air Slovakia and Slovak Airlines, have all connected Birmingham via their respective home base airports to Amritsar and/or Delhi, alongside long-term incumbent Turkmenistan Airlines. These services have arisen given the huge demand for a connection from the UK Midlands to the spiritual centre of the Sikh religion, and because of this, of the four destinations mooted by Brara, this is perhaps the most likely not to originate in Delhi, but in Amritsar instead.

Capitals linked (again)

The two most likely US routes for Air India would be Los Angeles – which it served via Frankfurt for over four years between June 2004 and September 2008; as well as Washington Dulles, which also saw flights in the past, but this time for less than six months between December 2009 and May 2010, originating in Delhi via New York JFK. After New York and Chicago, currently Air India’s only two US destinations, Washington and Los Angeles have the third and fourth largest Indian populations, with 130,000 and 120,000 respectively, according to the 2010 US Census. Outside bets as prospective new routes in the US market would be San Francisco (Indian population of 120,000), as well as Dallas/Fort Worth (100,000). However, anna.aero is going with Washington, given its significant Indian population size and the fact it was the US route served by the airline most recently.

So there we have it, anna.aero’s prediction for Air India’s new routes – Melbourne, Milan, Birmingham and Washington – four new services born, like most route development, out of analysis mainly, but also from harsh experience, gut feelings and because the chairman (former, now admittedly) has said ‘that’s where I have told people we are flying, now make it so’. Sound familiar anyone?

India should fly from Delhi to San Francisco with spoke flights from Bangalore, Hyderabad and Amritsar. Most of the IT NRIs are from Bangalore and Hyderabad and most of the farmers are from the Amritsar area.

Let me get this right. Are you saying for sure that Air India has selected BHX as second UK gateway and not MAN, or are you speculating? And that Amritsar will be the point of origin? The assertive headline does not tally with the final paragraph. And what most influences this statement, head or heart? Thanks

Hi David – in this particular case we are speculating – that’s our job as industry analysts. However, sometimes we unearth market intelligence that is 100% true, but just hasn’t been revealed by the airline in question.

Amritsar deserves the India – Birmingham flights, because half a million Punjabis belonging to areas surrounding Amritsar are settled in and around Birmingham. There are hardly any other Indians in the area. Right now Turkmenistan Airlines is running a highly successful operation between Birmingham – Ashgabat – Amritsar. This flight takes 13 hours, whereas Air India’s direct service will take under nine hours. Air India is likely to get more passengers.

Don’t be surprised if Dublin is used as an en-route stop to the US, solely for its USA Customs and Immigration facilities. DAA have been in regular contact with AI about this possibility. Also, the most recent Irish Census shows 85,000 Indian nationals live and work in Ireland!

I wouldn’t say any of these services failed as such. Load factors were always good but they were run more as group charters through travel agencies/third parties, rather than as scheduled services. Mahan Air had to stop flying the route as much for internal reasons, what with their aircraft getting impounded at the end by the lessor. This route was not failing. Likewise load factors on the other carriers were high. Do not remember Slovak Airlines on the route though, just Air Slovakia. Uzbekistan’s mistake was to try and continue the route westbound to JFK.

This shows the flawed policy guidelines of AI in so far as marketing the airline is concerned. If you look around to the west, East of India two of the most successful airlines are SQ and EK and what is their strategy? marketing 6th freedom. AI which for years and years concentrated on 3rd 4th freedom traffic is bleeding money while SQ and EK are very profitable. If AI think that Indians will all converge on AI when it flies to MEL they will be very sad. Also AI must not think carriers like SQ, MH, TG, CX will sit and wait. If you look to psychographics on Indian traveler they like to transit SIN or KUL because then they can take a international flight to MAA or BLR or any other destination. When you fly AI to DEL you have to do immigration in DEL and fly a domestic sector. If AI wants to succeed then it must provide connections to UK and other markets. If AI go down this path then like in the past they will operate for a while and withdraw. Let saner council prevail and look to the whole market as one and not just DEL and build the route net connections to West, M Est and South Asia

You can now transit in DEL by AI and take connection to MAA/BLR/HYD and do immigration there. I travelled from JFK to MAA via DEL and did my immigration in MAA. AI has international connection within 3 hrs of landing in DEL.

Air India has a history of squandering its revenues and marginal profits gained from domestic routes, gulf,middle east and parts of south east asia on UK, US and Eorope, only to suffer huge losses and final withdrawal. Wouldn’t it be better to consolidate and improve on new routes, rather than open new ones, and suffer all over again.

That’s great news that Air India might be coming to Melbourne, but they have been teasing us for years about starting a service so I won’t believe it until the day I see Air India metal on Tullamarine tarmac.

The case for Birmingham -Amritsar and linking to North America is a no brianer, as the VFR and religious traffic is also under pinned by business traffic. Add to this the growing importance of BHX as a cargo hub to feed the supply chain logistics in the heart of England. Welcome Air India , you were missed

Air India’s New Delhi – Washington D.C. – New Delhi flights are also unlikely to click. The New Delhi – Melbourne flights must be fed by spoke flights from Amritsar and Bombay. The New Delhi – Milan flights need a 30 minute stopover in Amritsar to create 100% load factor in economy class.

Air India must rescheduled its Direct Service Connecting Amritsar-Birmingham-Toronto…moreover Air India must also start direct flight from Amritsar to Los Angeles via Frankfurt, There is an peak load of Canada,US & Europe in Amritsar Surroundings that more than 35-40 lacs estimated Punjabi Diaspora is settled there so to Started Direct flights from Amritsar to Birmingham & Toronto, Amritsar to San Francisco via Frankfurt, Amritsar to Vancouver via Milan or Manchester would be most profitable Route from India…